California’s hotel industry is gearing up for significant changes with the introduction of two pivotal laws: California Senate Bill 644 and California Assembly Bill 537. While the former focuses on cancelation policies, the latter emphasizes pricing display transparency. In this blog, we’ll delve into the key aspects of each bill and explore their potential impact for hoteliers.
California Senate Bill 644 was officially endorsed by the Governor and filed with the Secretary of State on October 10, 2023, and mandates hotels in California to allow penalty-free cancelations within 24 hours after the confirmation if reservations are made at least 72 hours before check-in. Read the law
Similarly, California Assembly Bill 537, also approved by the Governor and filed with Secretary of State on October 13, 2023, prohibits the advertisement or display of room rates that exclude mandatory fees, except for government taxes and fees. Notably, this entails the inclusion of hotel resort fees in the presented room rates. Read the law
Both bills are set to take effect from July 1, 2024, onwards.
How do these legislative measures affect hoteliers’ operations?
The implementation of these laws brings a new era of transparency and operational adjustment to the hospitality sector. Primarily, hotels are required to revamp their systems in alignment with the new regulatory framework, ensuring compliance with California statuses. This entails integrating all fees into the displayed price, albeit government taxes and fees may be excluded, and delineating cancelation policies upfront during the booking phase. Such transparency safeguards travelers against hidden charges, fostering a clear understanding of what they are paying for.
Moreover, hotels may need to reassess their pricing strategy encompassing both room rates and ancillary pricing. With the mandate to incorporate all hotel fees into the advertised room rate, hotels must recalibrate their pricing models to maintain competitiveness in the market while simultaneously driving profitability. This strategic reassessment allows hotels to adapt to evolving guest expectations and industry standards, ultimately enhancing their market position and revenue potential.
These laws, while currently for California, could serve as a blueprint for other states, potentially leading to a nationwide shift towards greater transparency across the hospitality industry. We’ll be keeping watch to see how this impacts legislation nationwide.
